Crafting a Real Estate Empire with Private Money Strategy

Speaker 1: 0:02

In this episode of the EMI podcast, I have the pleasure of speaking with Jay Connor and we dive into the transformative power of private funding in real estate. Jay shares his Pipple shift from bank loans to private money back in 2009, where he enhanced his investment approach. Operating in a modest size market, jay's strategic use of private lending has yielded remarkable average profits, underscoring the potential in smaller markets. The three key takeaways include the significant impact of private money on business growth, the benefits of investing in a less competitive market and the transition from conventional financing to leveraging private investments for British success. Here are all of that and more, where we provide real estate investors with the tools to achieve generational wealth. This is the EMI podcast episode 68. Hello everyone and welcome to the EMI podcast. I'm your host, bud Evans. Today I'm joined by Jay Connor. Jay author, money guy, real estate guy. Do me a favor and give me a quick introduction.

Speaker 2: 0:55

Absolutely, bud. First of all, I just wanna say I'm just so thrilled and excited to be here because we get to talk about my favorite subject, which is private money for your real estate deals, and the reason I'm so excited about it is because private money has had the biggest impact on mine and my wife Carol Joy's business since we started, all the way back in 2003. And private money I tripled my business the very first year that I learned about private money and started using it. But we've been investing in single family houses here in Eastern North Carolina in a really small market of only 40,000 people. Our average profit right now per single family house is $78,000 per deal, and I don't say that to brag at all, I say that to make a point. I only do two to three deals a month, but at an average profit of $78,000, that math works out. And the point of that story is that you don't have to be in a big market with all the competition to make significant income. In fact, there's a great big argument to be made for the fact of invest in outlying areas. But anyway, we've been doing it since 2003. I started out traditionally borrowing money from banks and that's all I knew to do. But I tell you what. But something happened in 2009 that changed everything. Wonder what?

Speaker 1: 2:22

that was Jay. I gotta say each of my students private money and I know that you are a big proponent of private money, but I'm gonna guess that it had something to do with bank restrictions and a crash.

Speaker 2: 2:37

You reckon I remember it, but just like it was. Yesterday I was sitting here at my desk and I know it may be hard to believe it. We actually have handsets and cords attached to these handsets of a landline. A lot of your listeners don't even know what that is, but anyway, I was sitting here at my desk and I picked up my phone in January of 2009 to call my banker Now my banker. His name was Steve. He had been my banker for six years. I had done a ton of deals, with Steve being the funding source. So I had two houses under contract to buy and I called up Steve and we had a little chit chat and I told him about these two deals that I needed to have funding and I already had them under contract. I had a line of credit at the bank, right. So I learned very quickly, like that bud, that my line of credit had been shut down, gone with no notice. And when Steve told me that, I said Steve, what in the world are you talking about? We've been doing business for six years together. We've done a ton of deals. Why are you closing my line of credit? I've never been late on a payment. I got an 800 credit score. What's the deal? He says, jay, don't you know? There's a global financial crisis going on right now? I said no, but now, thanks to what you just told me, I got a financial crisis going on because I got these two deals under contract, representing over $100,000 in profit, and now I've got no way to fund these two deals. I hung up the phone with Steve. I sat here and I thought for a moment and here's a writer down her bud. I thought to myself and I asked myself a question. I said, jay, who do you know that can help you with your problem? By the way, there's a book out there by dr Benjamin Hardy. It's called who, not how, right. So I asked myself. This was way before that book came out. This was 2009. Who do you know they can help you with your problem? I immediately Thought of my good friend, jeff Blankenship, who lived in Greensboro, north Carolina, at the time and he was doing some real estate investing. And I called him up and I told him what had just happened and he said welcome to the club, jay. And I said what club? He said the club of losing your line of credit at the bank. They just took my line of credit away. Last week I said, jeff, how are you gonna fund your deals? He says have you ever heard of private money? I said no, what's private money? He says, have you ever heard of self-directed IRAs? And I said no, what's that? So Jeff told me essentially what private money was and how it worked and how you could raise it and really get in control of your own deals and Etc. And so I put together my private lending program and I put on my teacher hat. I put on my teacher hat that says private money, teacher, and I simply just started sharing With people in my network people at the Rotary Club, people I go to church, with People you know in my cell phone. I started sharing what private money is and how they can earn high rates of return safely and securely. And so here's the magic behind it. But I was able to raise over two million dollars in less than nine of days when Steve and the bank cut me off. I only had a million dollar line of credit when they cut me off. So that was the biggest blessing. In disguise of my banker cutting me off and losing my line of credit, I more than doubled my funding in less than 90 days. And so here's part of the secret sauce the traditional way to Borrow money for your real estate deals is you go to the local bank or you go to the hard money lender which, by the way, I never even heard of hard money back. Then you go to the hard money lender, you're banker and you get on your hands and knees and you beg and you put your hands underneath your chin. You say, please fund my deal, please fund my deal. You got to show tax returns, you got to show verification Manicum, you got to have a good credit score and it's just a hassle. You see, it's a hundred and eighty degrees scenario. When you're raising private money the way I do, I've never asked anybody for money. I've never tried to talk anybody into a deal, I've never pitched a deal. And people say, jay, how in the world have you got eight and a half million dollars available in private money that you just move on different projects all the time? And, number one, you've never asked anybody for money and you never pitched a deal. Here's the answer to that question. First of all, there's no begging, chasing, selling or persuading Anybody. Now be clear a private lender is not a hard money lender. A private lender is an individual, a human being, that loans us real estate investors from their investment capital and or their retirement funds to fund our deals. So there's no middle person involved. And so I simply started sharing my private lending program. And they say, jay, how do you do this without asking? It's all in the mindset. It's all in the mindset. I'm teaching. I'm not asking them for anything. I'm teaching people in my own network what private money is. I'm teaching them what self-directed IRAs are and how they can move their retirement funds over to a self-directed IRA company and earn tax-free or tax-deferred returns, with me paying them high-rate returns safely and securely. So I'm just sharing that. So after I share what it is and how it works and, by the way, I didn't run around town trying to chase people down I put on a private lender luncheon and invited 25 people to lunch and raised $969,000 in 90 minutes at one private lender luncheon. So there's none of this chasing Again, I was teaching. So then, after they say I'm excited about this and yeah, I'd love to be involved, they tell me how much they got to work with. And so then how do I not pitch a deal? It's real simple. I call them up with what's called the Good News Phone Call. Well, what's the Good News Phone Call the Good News Phone Call is? I call up, let's say, bud, you're one of my new private lenders. I call you and say, bud, we have a little chit-chat. And I say, bud, I've got good news for you. I can now put your money to work. You're waiting for the phone call right, and particularly if you've moved your money, your retirement funds, over to the self-directed IRA company that I recommended, I'm ethically bound to give you a Good News Phone Call because you're not making any money until I put your money to work. So here's the Good News Phone Call, but I can now put your money to work. I got good news for you. I've got a house over in Newport with an after-appared value of $200,000. So I told you where the house is located, I told you the after-appared value and now next, bud, the funding required for this deal is $150,000. I know you got $150,000. You already told me, and closing is next Wednesday. So you'll need to have your funds wired to my real estate attorney for closing by next Tuesday. I'm going to have my real estate attorney email you the wiring instructions. Now the most stupid question I could ask in that little role play is do you want to fund the deal? Of course you want to fund the deal. You've been waiting for me to call you to put your money to work. So again, we separate the conversations of teaching how the private lending program works and how they can get high rates of return, and then we give them the Good News Phone Call and then there we are, funding our first deal.

Speaker 1: 10:34

Love it, got to love it, jay. It's fantastic. And the amount of value that you're providing just the script alone, just saying, hey, this is the Good News Phone Call and this is how you handle this is. It's priceless.

Speaker 2: 10:46

But and I'll tell you another thing, buddy, and I know you've got a ton of students, so I'm risking getting ready to say something right now. If I'm going against what you teach, you just set me straight after I say it. So what drives me crazy is when I hear an expert tell people that they're training and stuff. They'll say just get the deal under contract, the money will show up. And I know you've heard that right, yeah, I've heard it Get the deal under contract, the money will show up. If you go to guru's school, it's like they teach you that script to say just get the deal under contract, the money will show up. And I want to say where is the money going to show up Exactly? It's just going to like rain out of clouds or something. And that's why I preach and teach and practice the money comes first. There's always going to be deals. There's always going to be deals, right, but get the private money lined up first and you don't have to worry about missing out on any deals. Now I do terms deals and creative financing as well. If somebody's got a mortgage and I'm talking to a presale by owner I'm going to do my best to buy that house, subject to the existing note. If it's free and clear, I'm going to do my best to buy that house with seller financing. But I have to review in thousands of property lead sheets over all these years. My statistic show and I'm a pretty good negotiator and I got the same acquisition as to me for 18 years my statistic show that only 13% of for sale by owners will sell to me creatively. What are the other 87% require All the money. They require all the cash. And just think how much more confident you're going to be when you've got the money lined up and how many more offers are you going to make, knowing that if you can't buy creatively, you can take that deal down with the cash. So it just opens up your world. In the world, real life, most people require all the cash PISBOS, of course. If it's in the multiple listing service, they do as well. So private money just really puts you in the driver's seat of your business.

Speaker 1: 13:06

It sure does. And, Jay, I'm going to give you a plug, because before I read your book, my system was deals on demand, then funding, then the investor's toolbox, and then optimization and scaling. And I've since redone it and now it is funding, then your deals, then your toolbox, then your scaling. I got to give you kudos for that one man, because you completely changed my line of thought.

Speaker 2: 13:32

Awesome. I'm so glad I didn't run into your head first.

Speaker 1: 13:37

Not at all, not at all. Hey, listen, I was. I just started coaching a little while ago, but I was taught by people who told me find the deal and the money will come. And it just, it was a scramble every time. I found a deal every time until recently.

Speaker 2: 13:56

I'm just not excited about putting an offer in on a house. In fact, I never have Putting an offer in on a property and I have no idea where the funding is going to come from. Talk about stressful, but when you can make an offer hey, listen to this when you can make an offer to a seller of a property and you can put in writing all clothes, all cash in seven days Wow, you get more offers accepted when the competition actually offered him money. This very thing happened just last week, bud. I bought a house here in Morehead city after a paired value $550,000. I bought it for 325. Did you know? The seller had another offer at 375? $50,000 more than my offer, but I could close in seven days, nice.

Speaker 1: 14:55

Yeah, Exactly, and that's time is everything isn't it?

Speaker 2: 14:59

Time is really everything when you're talking to a distressed owner that's motivated to sell for whatever one of many reasons, and the quicker they can get the cash, the more likely they're going to take your offer.

Speaker 1: 15:51

Yes, sir, absolutely. Now I've gone through. Have you ever run into a situation where your private money commits and then backs out?

Speaker 2: 16:00

Every now and then. Yes, I've got. I got these 47 private lenders. We've been doing it since 2009, but it's very out of the ordinary. So there's a lesson in that. Don't have all your eggs in one basket and don't be doing business with just one private lender. That was my big mistake, but thank goodness for the mistake, thank goodness for the lesson. I had all my eggs in one basket when I was doing business with the bank. The bank was my only source of funding and when they shut me down, I was shut down, but not for long, but when you got all your eggs and, by the way, for goodness sakes, for you that's listening to this show you don't need 47 private lenders. For goodness sakes, start out with one or two. My very first private lender told me they had $250,000 and one to put it to work right away. But again, don't just be working with one funding source. Yes, sir.

Speaker 1: 17:09

Now let's talk about the book, because you're it's a game changer when we're talking about raising private capital. Can you just go into it a little bit for me if you don't mind?

Speaker 2: 17:21

Sure. So when we're talking about raising private capital, again we're talking about doing business with individuals and the book that we've been talking about where to get the money now you know what bud Did you know that the US Postal Service is actually still in business? So my book that I want to give away to your listeners this book is $20 on Amazon, but you can get it for free at this URL link. I'm going to give out just cover shipping. But where to get the money now, subtitle how and where to get money for your real estate deals without relying on traditional or hard money lenders. This book breaks it down step by step, exactly how I did and how I do today attract millions of dollars very quickly, and so it's very easy to read. Bud can attest to that because he's got the book. But here's the link where you can order the book. I'll autograph it. Well, three day priority mail it to you. It's wwwjconnerjaycornercom. Again, I'm an ER, not an OR. So J-A-Y-C-O-N-N-E-R dot com forward slash book will rush it right out to you. I tell you what. But while we're giving away stuff, I wasn't really planning on doing this, but I don't know. It must be the spirit or something or another, but I've got a $3,000 gift for your listeners as well, in addition to the book. I put on three times a year what's called the private money account academy conference the private money conference and it's here in Moritz City, atlantic Beach, three times a year in February, june and October. In person. I don't live stream it. I have private lenders come to the event, you network with private lenders and et cetera, and this is a $3,000 event for two tickets. But your listeners, I'm going to give out a URL right now that they can come for free, with just a $97 registration fee, and here's the URL wwwJaysLiveEventcom J-A-Y-S-L-I-V-E-E-V-E-N-Tcom JaysLiveEventcom, and that'll get you in the door and bypass the $3,000 tickets.

Speaker 1: 19:39

Outstanding. Thank you very much for that, jay, I have. I guarantee you I'm going to have a couple of people that are going to be very happy about that, and more than just a couple, by the way. Awesome, jay. I'm going to ask you. I appreciate all the information, all the value you're providing, but I got to ask what is one thing that you learned as your wealth increased?

Speaker 2: 19:59

The one thing I learned is that if you're going to stay in the game and you're going to survive and you're going to not only survive but you're going to thrive probably the most important personal characteristic you're going to need is resiliency. The challenges are going to come along and, of course, I shared my big challenge was when I was cut off from the bank, and one big thing I learned that I actually put in practice in that story that I just shared is a formula that I learned from Jack Canfield. Jack Canfield is the co-author of the Chicken Soup for the Soul series books that is sold in the book who? Millions and millions of books, and I've actually gotten to be around Jack a couple of times and he's just a wonderful human being. But I learned this formula from Jack that will change your life. If you feel like you're a victim and you're just not in control of your destiny, here's the formula. The formula is E plus R equals O. The E stands for event, the R stands for response, the O stands for outcome. So what does that mean? The E event. Most people are living life, unfortunately, with a different formula. Most people are living life with a formula of E equals O the event, whatever it is that happens in your life determines your outcome, but that's not the success formula. Whatever happens in your life, you might have caused it. Maybe you didn't cause it, like in my story, I didn't cause getting cut off from the bank. I'd done my part of the deal right, but that event happened. Now here's the deal. I didn't have any control of that, but guess what I had 100% room control of, and that is how am I going to respond to that event that happened in my life. It's my response, it's your response to whatever that happens in your life that will determine the outcome that you are experiencing in life. So remember that formula and it'll turn you from feeling like a victim to being a victor and in control of your destiny.

Speaker 1: 22:26

That's fantastic. That's absolutely fantastic. I put that right up there with the opportunity plus preparation. Equals luck. True, it's all about how you respond to things. That's going to generate the outcome. Negative people create negative outcomes. Positive people create positive outcomes. That's it, fantastic, jay, we're going to go into the soaring force. These are the same four questions that I ask every guest that can help someone who's just starting out in real estate achieve new bites. The first one is what do you use to keep yourself motivated?

Speaker 2: 23:00

Oh, that's an easy question. I can tell you what I keep myself motivated it's by being very intentional about the people that I hang around. Yes, so, for example, my wife, carol Joy and I, we are in three different mastermind groups. Three different mastermind groups, so we're hanging around people that are like-minded, working towards the same goal. And, of course but I know you're very familiar with the quote that Jim Rown, the late great Jim Rown, is attributed to, and that is, you are the average of the five people that you hang around most of the time. So some of them people you're hanging around, you might need to choose some new friends. I agree, yeah.

Speaker 1: 23:49

I can guess. If I told my nephew this one time I said look the five guys that you hang around with. I can guess your salary within a thousand dollars if I know theirs. So there you go. Fully agree with that. What is one thing that you learned that completely changed your mindset?

Speaker 2: 24:05

One thing I learned that changed my mindset. Let me answer it. I got a lot of lessons learned over the years. I'll tell you. Your question actually takes me back to a book that I read when I was 24 years old. That changed my mindset. When I was 24 years old and 23 years old and 22 years old I was in a very dark place. Life was not happy for me at all and it was because of the choices that I was making. It was my responsibility, but I was in a very dark place and so I woke up one morning I said there's got to be a better way. So I went to the bookstore and I was looking in the personal development section I came across this book by Ag Mandino, and the name of the book is University of Success. In fact, I've got that original book when I bought when I was 24 years old on my bookshelf at the house right now. That book changed my mindset and my total outlook on life University of Success. It's still in print today. I highly recommend it.

Speaker 1: 25:18

I'm going to have to check the one out for sure. I read all the time, but I haven't read that one. So what are some tools that you use to keep yourself on track?

Speaker 2: 25:28

Wow, I tell you one big tool I use to keep myself on track and that is the CRM, the Customer Retention Management Software. Here's a writer downer. The money is in the follow up, the money's in the follow up. And I tell you what. I ran this business for years on Post-it notes and Yellow Pads. But I hate to even think about how many deals and how many hundreds of thousands, if not millions, of dollars, I lost by not having a very organized software to keep up with all my seller leads, keep up with all my buyer leads for those houses that I sell on terms. So I started using a software to put all my leads in, keep all my notes and always task myself for what happens next. My acquisitionist and I and my lead manager everybody on my team has got access to the software so we know exactly where we are in the pipeline of every one of those leads. Because if you don't have your leads in software for you to manage your leads, you're going to miss out big time.

Speaker 1: 26:45

Yes, sir, I just plug them into my calendar. Honestly, I have a CRM. I love the CRM. Follow up questions and whatnot, or follow up calls and whatnot. Not only do I put it in the CRM, I throw it in my calendar as well and time block myself, but perfect. The final question, jay, is if you had to start all over, what is one thing you would change?

Speaker 2: 27:05

I'll tell you one thing I would have changed if I started over. I certainly would have started. I would not have started out trying to do this business by myself, with no coaching, with no mentorship. For goodness sakes, my first six years I was out here, I was relying on my past experience in the mobile home and manufactured housing business, and I mean my lens. I was in this business for six years before I even heard about private money. I was in this business six years before I heard about subject to the existing note, before I heard about self-directed IRAs, before I learned about creative financing. For goodness sakes, get plugged in with someone like Bud that can hold your hand, that's been doing deals, and here's one thing about it You're going to pay for your education one way or the other. You're either going to pay for your education with someone that knows what they're doing, that will hold your hand, or you're going to spend a whole lot more money with big time expensive mistakes. Don't start out by yourself.

Speaker 1: 28:11

Yes, sir, I cannot agree with that more if I wanted to. You're paying for that education one way or the other, so I appreciate the plug too. Thank you very much for that.

Speaker 2: 28:23

Jay.

Speaker 1: 28:24

I do appreciate your time. I know you're very busy. Honestly, I've been trying to get you on.

Speaker 2: 28:29

We've been touching base here and there, trying to get us together, and thank you very much sir Bud, thank you so much for having me on and my lens come on down here to one of my private money live conferences. I'd love to network with you in person. God bless you, bud, thank you. Thank you, sir. I'll talk to you soon. Bye-bye.